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End of the road for cheap car insurance

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– Motorists hit by substantial hikes in insurance prices, as the Confused.com Car Insurance Price Index Q3 2015 reveals an annual price rise of 8.1% –

The days of cheap car insurance appear to be over, with comprehensive car insurance premiums rising substantially during the third quarter of 2015, with motorists now paying £47 more than they were this time last year, according to the latest Confused.com Car Insurance Price Index in association with Towers Watson.

This means that the average quoted premium for an annual comprehensive car insurance policy now stands at £629 in Q3 2015, compared to £582 in Q3 2014.

These sharp price hikes bring to an end three years of declining premiums, with motorists having faced a quarterly rise of 4.8% (+£29) – equating to a price increase of almost £10 a month over the last three months. This is the first time in nearly five years that motorists have been hit by such a dramatic quarterly increase (Q4 2010 – 7.1% quarterly increase).

Such substantial rises in premiums couldn’t come at a worse time for motorists, who will also be hit by the Government’s increase in insurance premium tax in November, which is expected to push up average prices by a further £21*.

While average premiums are rising strongly for most motorists, interestingly, prices for drivers aged 17 are going against the trend and have increased marginally by just 0.3% annually. This could potentially be a result of the use of black box technology, as many insurance firms focus their use of black boxes on the younger age groups.

Despite younger drivers (aged 17 and 18) enjoying some of the lowest annual increases, of 0.3% and 2.9% respectively, premiums for this age group are still higher than average. The average premium for 17 year olds in Q3 2015 was £1,916 – £1,287 higher than the overall UK average, and £1,934 for drivers aged 18 years old – £1,305 more.

However, it’s a different story for older drivers, who are bearing the brunt of the price hikes. And it’s those aged 68 who are being hit the hardest, experiencing an annual price increase of 15.3% – the highest of any age group, bringing their premium up year on year by £59 to £439, compared to £380 in Q3 2014. Drivers aged 60 are also amongst the worst off, as they are facing the largest quarterly price hikes of 8%, seeing their premiums increase by £29 over the quarter, more so than any other age group, to stand at £393.

Both men and women have seen their premiums rise year on year, with increases of 8.9% and 7% respectively. The average man’s premium now stands at £657 (+£54 year on year), and women’s at £593 (+£38 year on year).

These increasing premiums are being felt across all regions of the UK, with motorists up and down the country subject to rising prices. However, those in the West have been hit the hardest. Motorists in this region have seen their premiums rise by 12% over the last 12 months – the highest increase of any region in the UK.

And whilst the West as a whole has experienced bumper price rises, some cities in the region have seen larger increases than others. Drivers in Bath have seen their premiums increase annually by 14.7%, with motorists in nearby Bristol experiencing price rises of 12.8% over the year. Neighbouring Gloucester and Swindon have been hit by increases of 13.8% and 10.2% respectively.

Scotland is also facing steep rises in premiums, with the Scottish Highlands experiencing the largest quarterly price increases, of 8% – significantly higher than the national average (4.8%). However, drivers in the Scottish Hebrides are by far the worst off, where they face a quarterly increase of 20% – one of the largest quarter on quarter increase recorded since the Index began at the end of 2006.

Steve Sanders, Finance Director at Confused.com says:

“It would seem that the days of cheap car insurance really are over – just like 6 years ago we’re seeing substantial increases in prices for most UK motorists, with only the very youngest of our driver profiles being relatively unaffected.

“And with the Government’s increase in insurance premium tax, rising from 6 to 9.5 per cent this November, we’re likely to see continued inflation in car insurance prices across the rest of 2015, and into 2016.

“As ever, our advice to all drivers is to shop around at renewal using a site such as Confused.com, to make sure that they are getting the very best prices without compromising on levels of cover.”